ServiceSource International, Inc. Announces Pricing of $130 Million Offering
of 1.50% Convertible Senior Notes Due 2018
Business Wire
SAN FRANCISCO -- August 8, 2013
ServiceSource International, Inc. (“ServiceSource”) (NASDAQ: SREV) today
announced the pricing of $130 million aggregate principal amount of
convertible senior notes due 2018 (the “notes”) in a private placement to
qualified institutional buyers pursuant to Rule 144A under the Securities Act
of 1933, as amended (the “Act”). The size of the offering was increased from
the previously announced $120 million aggregate principal amount.
ServiceSource also granted the initial purchasers of the notes a 30-day option
to purchase up to an additional $20 million aggregate principal amount of the
notes to cover over-allotments, if any. The sale of the notes to the initial
purchasers is expected to settle on August 13, 2013, subject to customary
closing conditions.
The notes will be senior unsecured obligations of ServiceSource, and interest
will be payable semi-annually in arrears at a rate of 1.50% per year. The
initial conversion rate is 61.6770 shares of common stock per $1,000 principal
amount of notes (which is equivalent to an initial conversion price of
approximately $16.21 per share). Prior to February 1, 2018, the notes will be
convertible only upon the occurrence of specified events and during certain
periods; thereafter, until maturity, the notes will be convertible at any
time. Upon conversion, the notes will be settled in cash, shares of
ServiceSource’s common stock or any combination thereof at ServiceSource’s
option.
In connection with the pricing of the notes, ServiceSource entered into
privately-negotiated convertible note hedge transactions with certain
financial institutions, which include certain of the initial purchasers and/or
their affiliates (the “hedge counterparties”). The convertible note hedge
transactions are expected, but not guaranteed, generally to reduce the
potential dilution to ServiceSource’s common stock and/or offset the cash
payments ServiceSource is required to make in excess of the principal amount
upon conversion of the notes in the event that the market price of
ServiceSource’s common stock is greater than the strike price of the
convertible note hedge transactions, which initially corresponds to the
initial conversion price of the notes. ServiceSource also entered into
privately negotiated warrant transactions with the hedge counterparties. The
warrant transactions could separately have a dilutive effect if the market
price of ServiceSource’s common stock exceeds the strike price of the warrant
transactions, unless ServiceSource elects, subject to certain conditions, to
settle the warrant transactions in cash. The strike price of the warrant
transactions will initially be approximately $21.02 per share, which
represents a premium of approximately 75% over the last reported sale price of
ServiceSource’s common stock on August 7, 2013, and is subject to certain
adjustments under the terms of the warrant transactions. If the initial
purchasers exercise their over-allotment option, ServiceSource may enter into
additional convertible note hedge transactions and additional warrant
transactions with the hedge counterparties.
ServiceSource has been advised by the hedge counterparties that, in connection
with establishing their initial hedge of the convertible note hedge
transactions and warrant transactions, the hedge counterparties and/or their
respective affiliates expect to enter into various derivative transactions
with respect to ServiceSource’s common stock and/or purchase shares of
ServiceSource’s common stock in privately negotiated transactions and/or open
market transactions concurrently with, or shortly after, the pricing of the
notes. These activities could have the effect of increasing, or preventing a
decline (or reducing the size of any decline) in, the market price of
ServiceSource’s common stock at that time. In addition, ServiceSource has been
advised by the hedge counterparties that the hedge counterparties and/or their
respective affiliates may modify their hedge positions from time to time
following the pricing of the notes and prior to the maturity of the notes (and
are particularly likely to do so during any observation period relating to a
conversion of the notes) by entering into or unwinding derivative transactions
with respect to ServiceSource’s common stock and/or by purchasing or selling
shares of ServiceSource common stock or the notes in secondary market
transactions. This activity could also have the effect of increasing, or
preventing a decline (or reducing the size of any decline) in, the market
price of ServiceSource’s common stock or the notes, which could affect the
ability of noteholders to convert the notes and, to the extent the activity
occurs during any observation period related to a conversion of the notes,
could affect the amount and value of the consideration that noteholders will
receive upon conversion of the notes. The convertible note hedge transactions
and warrant transactions have not been, and will not be, registered under the
Securities Act or the securities laws of any other jurisdiction and may not be
offered or sold in the United States without registration or an applicable
exemption from registration requirements.
ServiceSource expects to use a portion of the net proceeds of the offering of
the notes for the cost of the convertible note hedge transactions after such
cost is offset by the proceeds of the warrant transactions described above,
and to use the remaining proceeds of the offering for general corporate
purposes, including working capital, capital expenditures, potential
acquisitions and strategic transactions.
This announcement is neither an offer to sell nor a solicitation of an offer
to buy any of these securities and shall not constitute an offer,
solicitation, or sale in any jurisdiction in which such offer, solicitation,
or sale is unlawful. The notes and the shares of common stock issuable upon
conversion of the notes, if any, will not be registered under the Act or any
state securities laws, and unless so registered, may not be offered or sold in
the United States except pursuant to an exemption from the registration
requirements of the Act and applicable state laws.
Contact:
ServiceSource
Anne Bawden, 415.901.4182